Correlation Between SFP Tech and EA Technique

Can any of the company-specific risk be diversified away by investing in both SFP Tech and EA Technique at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SFP Tech and EA Technique into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SFP Tech Holdings and EA Technique M, you can compare the effects of market volatilities on SFP Tech and EA Technique and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SFP Tech with a short position of EA Technique. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFP Tech and EA Technique.

Diversification Opportunities for SFP Tech and EA Technique

0.61

Correlation Coefficient

SFP Tech  EA Technique

Poor diversification

The 3 months correlation between SFP and 5259 is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SFP Tech Holdings and EA Technique M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Technique M and SFP Tech is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SFP Tech Holdings are associated (or correlated) with EA Technique. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Technique M has no effect on the direction of SFP Tech i.e., SFP Tech and EA Technique go up and down completely randomly.

Pair Corralation between SFP Tech and EA Technique

Assuming the 90 days trading horizon SFP Tech Holdings is expected to under-perform the EA Technique. In addition to that, SFP Tech is 1.45 times more volatile than EA Technique M. It trades about -0.32 of its total potential returns per unit of risk. EA Technique M is currently generating about -0.02 per unit of volatility. If you would invest  30.00  in EA Technique M on December 30, 2024 and sell it today you would lose (2.00) from holding EA Technique M or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

SFP Tech Holdings  vs.  EA Technique M

SFP Tech Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFP Tech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

EA Technique M

Risk-Adjusted Performance

Very Weak

Over the last 90 days EA Technique M has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, EA Technique is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SFP Tech and EA Technique

The main advantage of trading using opposite SFP Tech and EA Technique positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFP Tech position performs unexpectedly, EA Technique can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in EA Technique will offset losses from the drop in EA Technique's long position.

The idea behind SFP Tech Holdings and EA Technique M pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.